Drop in dairy product prices drives world food prices to new low

A drop in dairy product prices and vegetable oils has driven world food commodity prices to their lowest July value in six years.

The drop in dairy prices and vegetable oils more than offset some increases for those of sugar and cereals, while meat prices remained stable, the Food and Agricultural Organisation (FAO) says.

The FAO Food Price Index averaged 164.6 points in July, down 1% from June, and 19.4% from a year earlier.

The trade-weighted index tracks prices on international markets of five major food commodity groups: cereals, meat, dairy products, vegetable oils and sugar.

In July, the dairy price index dropped 7.2%  from the previous month, which the FAO says was mainly due to lower import demand from China, the Middle East and North Africa amid abundant EU milk production which has resulted in good availability of dairy products for export.

The July vegetable oil price index was some 5.5% below its June level, reaching its lowest value since July 2009, according to the FAO.

Meanwhile, the cereal price index rose by 2% from June, but was still 10.1% below July last year’s level, it says.

For the second consecutive month, higher wheat and maize prices, in part due to unfavourable weather in North America and Europe, kept the cereal index rising, the FAO says but rice prices continued to fall.

In July, the meat price index remained nearly unchanged from the previous month.

An increase in international prices of bovine meat offset a decline for pig meat and ovine meat, while prices for poultry remained stable, the FAO says.

The sugar price index rose by 2.5% from June 2015, which the FAO says was largely due to less than ideal harvesting conditions in the main producing region of Brazil.